Germany’s budget surplus swelled last year and touched all levels of government for the first time since reunification more than two decades ago, strengthening its hand in helping to dictate how vulnerable European countries such as Greece should improve their own finances while likely underscoring worries that Germany isn’t doing enough to stimulate its economy. Read More »

Bank of England Governor Mark Carney on Tuesday said a return to crisis conditions in the eurozone would be a “serious issue” for the U.K. economy, but added that the problems confronting the currency area appear to be less acute than in 2011 and 2012, and the ability of policy makers to respond greater. Read More »

The International Monetary Fund plans to sidestep Congress after Republican lawmakers again rejected ratification of a five year-old deal to overhaul the emergency lender’s antiquated governance. Read More »

Just sharing a currency isn’t enough for the eurozone to defy its skeptics, European Central Bank President Mario Draghi said Thursday in a speech that reminded his audience about the foundations needed for a successful single currency area. Read More »

Social media helps news spread like wildfire. That’s great if you’re a celebrity plugging a new recording, or an activist seeking to expose an injustice, but maybe not so great if you are a euro-zone country with a debt problem.

A new paper, published by economists from Greece’s International Hellenic University, the U.K.’s University of Liverpool and the University of Macedonia, examines whether tweets, Facebook posts, blogs and Google searches influenced euro-zone bond markets during the darkest days of the currency area’s debt crisis.

Their conclusion? That a flurry of online activity—or more specifically, the information contained in those tweets, searches and posts–pushed up the borrowing costs of Greece and other troubled nations. Read More »

Athanasios Orphanides has a theory on what went wrong in Europe: The governance of the euro-zone was incompatible with prudent management of a major crisis. Some big countries – notably Germany – exploited the flaws in the system to its advantage at the expense of others. The 2009 recession was triggered by the U.S., but the 2011 recession was made in Europe and was avoidable.

“Rather than work towards containing total losses, politics led governments to focus on shifting losses to others. The result was massive destruction in some member states and a considerably higher total cost for Europe as a whole.” Read More »

That’s essentially what former U.S. Treasury Secretary Timothy Geithner said in 2011, when asked if Europe’s crisis threatened the U.S. financial system. “No, absolutely no,” Mr. Geithner told House lawmakers in an October 7 hearing. “The overall picture is very limited direct exposure,” he said.

That’s contrary to the narrative presented Wednesday by Mark Sobel, who had a front row seat to the crisis as a top Treasury diplomat and is now the administration’s nominee to represent the U.S. on the International Monetary Fund’s executive board. Read More »

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